In the last Uncertainty Wednesday, I told three episodes from my life to illustrated just how pervasive uncertainty is in our lives. Today I want to tackle the first and maybe most fundamental implication of that: you cannot know what your life would have been had you made a different decision. This is a fundamental aspect of the human condition. We only observe the one life that was realized, not the many that could have been. This is what Milan Kundera refers to as the “Unbearable Lightness of Being” in his book of the same title.

Now you might object with something along the following lines: “Clearly I would be better off today if I had put money into bitcoin in 2011 and then sold near the peak in 2017.” The fallacy in this type of hindsight analysis is that it holds everything else constant. That is you say “given the path of the world that was realized, if I had picked differently I would be better off.” But the point of pervasive uncertainty is that many paths of the world were possible. Those surely include paths in which Bitcoin doesn’t have some massive runup. And they include paths in which you buy the Bitcoin in 2011 but then sell it at a loss. And even the path where you make a lot of money on Bitcoin then includes new possibilities, such as you fulfilling your lifelong dream of buying a fast car, only to wind up in a terrible accident. So no, you cannot know that you would in fact definitely be better off. 

The alternative life is fundamentally unknowable.

But what does this imply? One conclusion is that we should not second guess the decisions we made. This is time not well spent and can be a source of great misery if one engages in it. Crucially though this is not the same as saying that we cannot get better at decision making. Huh? This would seem to be a direct contradiction to what I just said. This seeming contradiction hinges on separating what actually happened (outcomes) from how we thought about what could happen at the time we made the decision. This will be the subject of many of the posts to come.